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Staples upsizes, rejiggers $3.03 billion two-part bond offering, sets talk; books close Monday
By Paul A. Harris
Portland, Ore., April 8 – Staples, Inc. announced changes to an upsized $3,025,000,000 offering of high-yield notes, in addition to setting official price talk on Monday, according to market sources.
An upsized $2,025,000,000 tranche of seven-year senior secured notes (B1/B+) is talked to yield 7¼% to 7½%, tighter than initial guidance in the 7½% to 7¾% area.
A downsized $1 billion tranche of eight-year senior unsecured notes (B3/B-) is talked to yield in the 10¾% area, wider than initial guidance in the high 9% to low 10% area.
Books close at 5 p.m. ET on Monday, and the Rule 144A and Regulation S for life deal is set to allocate on Tuesday.
The secured notes tranche is upsized to $2,025,000,000 from $750 million. That upsize represents the shift of $375 million of proceeds to the secured notes from the unsecured notes, as well as the shift of $900 million of proceeds to the secured notes from the concurrent bank loan, decreasing the loan size to $2.3 billion from $3.2 billion.
Along with the changes in tranche sizes there were also changes to the offering documents.
Goldman Sachs & Co. LLC is the left lead. UBS Investment Bank, BofA Merrill Lynch, Barclays, Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Jefferies LLC, KKR Capital Markets, Morgan Stanley & Co. LLC, RBC Capital Markets LLC and Wells Fargo Securities LLC are also leads.
The notes in both tranches become callable after three years at par plus 50% of the respective coupons and feature 40% equity clawbacks at par plus the full coupons.
The Framingham, Mass.-based business supplies distributor plans to use the proceeds, together with borrowings under its term loan and ABL facility, to make a distribution to shareholders, refinance existing term loan debt and redeem existing notes.
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